Here's a good way, when you see some beautiful old brand that was part of your past/memories "suddenly" go out of business or bankrupt, like Toys R Us, Hertz... look for "private equity" and imagine this metaphor:
Gino's Pizza. Popular, been there for 50 years. Everyone loves Gino's, and Sal Gino, the current owner, is third-generation. But Sal's gotten old, and he fell once, so he and Ann are thinking of selling. Either the kids don't want to do pizza or they didn't have any kids.
So, they COULD sell it to a young couple who want to get into pizza, but it won't do much for retirement, and they COULD sell the building to something like Sbarro, but that'd be kind of sad. What's Sal and Ann to do.
Well, along comes a helpful place, which has a lot of words in it, usually something like Capital or Funds or Ventures in the name. And they say "We're going to give you heaps of cash for your place and we'll make it something special and ______ (endless words)." So they sell.
So, great. Sal and Ann go to Florida. Bye, folks, thanks for everything.
Now the buyers get to work. Oh, some people will say it's good news they sold the place, others will say that this minor issue with the chairs or the pizza will now get "fixed" after years of Sal saying no
Now the buyers get to work. Oh, some people will say it's good news they sold the place, others will say that this minor issue with the chairs or the pizza will now get "fixed" after years of Sal saying no
ha. ha.
First thing the new owners do is add up the cost of EVERYTHING. All equipment, revenue, the building, the plot, the apartments above. They now have a number for collateral to take out a loan. A HUGE loan. A MIRACULOUSLY FUCKING MASSIVE LOAN.
Now Gino's Pizza owes millions.
Now Gino's Pizza owes millions.
Gino's Pizza is dead. It's all a matter of time. Those millions against Gino's are not going to fix the chairs or add that new menu item everyone wants. No, Gino's main profits will all be plowed into interest payments on those millions. Year in, year out.
Some people will know something's up - the cheese is now this weird processed stuff, the drinks are all this subsidized crappy off-brand stuff, and the folks working there are cranky because they've been told mysterious economic issues mean no raises, bonuses, holiday time
At this point, the Gino's Ghost ship can drag along for years! Maybe people have even forgotten what happened and there's no Sal behind it. Maybe they just need pizza at 10pm and it's there, and it's crap but who cares. Life accepts well-placed mediocrity.
And at a date in the future - a change in how much the processed junk cheese costs, a new pizza place down the road by an actual real family, or even a stock market blink or trade tariffs, and Gino's Pizza will miss an interest payment and BAM, it's pretty much goodbye to Gino's
But only some people will remember that millions-of-dollars loan that was eating 100% of Gino's profits, or how they traded on the family name on the posters while destroying the quality. Most will go "huh... must be amazon/foodcourt/fibbledeedee". Momentary experts.
Anyway, that's going on constantly and it appears we accept it, and nothing is being done to stop it, sleep tight.
